The 1997 Provincial Budget Highlights
1996-97 in Review
- The Province is forecasting a deficit of $6.9 million for 1996-97. A surplus of $3.4 million was initially budgeted.
- Current program spending in 1996-97 was $13.8 million higher than the Budget estimate, mostly because of an $11.2 million increase in spending by Health and Social Services.
- The Conference Board of Canada estimates the Island economy grew by 2.6 per cent in 1996 - well above the national rate of 1.5 per cent.
- The Province will run a $17.1 million deficit in 1997-98. Because of various economic and fiscal factors, including a $12 million drop in the Canada Health and Social Transfer payment to Prince Edward Island, a $55 million deficit would have been incurred had the Government continued to deliver the same programs and services in the same manner.
- Beginning with this Budget, detailed financial projections for two years after the Budget year will be provided. Departments and Agencies have been allocated spending targets that will allow the Province to balance the budget, or better, in the next two years - 1998-99 and 1999-00. The economy is also expected to rebound in these years as it recovers from a temporary dip in the post-Bridge construction period.
- To accomplish the Government s financial goals, operating expenditures are cut by $21 million in 1997-98. The impact of government restructuring on public employees is being managed through proper planning, attrition and a workforce adjustment program.
- Key areas of public services have been protected from major spending cuts. Education and Health & Social Services, together, have been reduced by only 0.3 per cent from the previous year spending levels. All other areas of government program spending are reduced by 8.4 per cent.
- The Government will disband the Health and Community Services Agency to improve accountability and achieve administrative savings in the delivery of health care and social services. No existing health care facilities or small schools will be closed.
- Capital funding for School Repairs is increased $1 million.
- GST rebates will not be taken into account in determining the amount of social assistance that individuals and families require.
- A new Seniors Advisory Council will be established.
- A new federal-provincial Infrastructure Agreement will make $7.1 million available for new community infrastructure projects.
- The Equity Investors Program is being enriched and expanded into more sectors to improve access to capital for businesses.
- Improvements to the Province s debt management will produce interest cost savings.
- Various tax measures will prevent larger reductions in essential public services, while ensuring the costs of deficit reduction are borne fairly by all.
- The Gasoline Tax is increased one cent per litre.
- The sales tax on private sales of used motor vehicles increases from 10 per cent to 12.5 per cent.
- Annual motor vehicle registration fees are increased from $68 to $75, and driver licenses are raised from $10 to $15 per year.
- The threshold for the provincial high income surtax is reduced from provincial tax payable in excess of $12,500 to provincial tax payable in excess of $5,200 - individuals with incomes in excess of $60,000 will start paying the surtax.
- New investments by individuals in labour sponsored venture capital funds will no longer qualify for a provincial tax credit.
- The general corporate income tax rate is raised from 15 to 16 per cent, effective July 1, 1997.
- The Government's share from video lottery profits is increased from 50 to 55 per cent.
- Increased tax audits will help the Government to more efficiently collect the money it is owed.